Reserve Bank of India (RBI) headquarters in Mumbai. (Reuters)
Reserve Bank of India (RBI) headquarters in Mumbai. (Reuters)

RBI slaps penalties on 36 major banks for non-compliance in SWIFT operations

  • The banks include, Bank of Baroda, City Union Bank, HSBC, ICICI Bank, SBI and YES Bank
  • The RBI had carried out an assessment of compliance with its directions on implementation and strengthening of SWIFT-related operational controls of 50 major banks

MUMBAI : The Reserve Bank on Friday said it has imposed penalties worth 71 crore on 36 public, private and foreign banks for non-compliance with various directions on time-bound implementation and strengthening of SWIFT operations.

SWIFT is a global messaging software used for transactions by financial entities. The massive 14,000-crore fraud at the PNB was a case of misuse of this messaging software.

The banks include, Bank of Baroda, City Union Bank, HSBC, ICICI Bank, SBI and YES Bank.

The penalties, ranging from 1 crore to 4 crore, were imposed by orders dated 31 January, 2019, and 25 February, 2019, the RBI said in a statement.

It, however, added that penalties are based on deficiencies in regulatory compliance and "is not intended" to pronounce upon the validity of any transaction or agreement entered into by the banks with their customers.

The RBI had carried out an assessment of compliance with its directions on implementation and strengthening of SWIFT-related operational controls of 50 major banks.

The assessment, the RBI said, revealed that banks had not complied with one or more of the major direction pertaining to direct creation of payment messages in the SWIFT environment and introduction of an additional layer of approval for all payment messages exceeding a particular threshold, among others.

Based on the findings of the assessment and extent of non-compliance, notices (SCNs) were issued to 49 banks advising them to show cause as to why penalty should not be imposed for non-compliance with directions.

"After considering the replies received from the banks, oral submissions made in the personal hearings where sought by the banks, and examination of additional submissions, if any, RBI decided to impose monetary penalty on aforementioned 36 banks, based on the extent of non-compliance in each bank," the Central Bank said.

Penalty of 4 crore each has been imposed on Bank of Baroda, Catholic Syrian Bank, Citibank N.A., Indian Bank and Karnataka Bank.

The penalty on BNP Paribas, City Union Bank, Indian Overseas Bank, UCO Bank, Union Bank of India, and United Bank of India, is 3 crore each.

The amount is 2 crore each in case of Allahabad Bank, Bank of Maharashtra, Canara Bank, DCB Bank, Dena Bank, Jammu & Kashmir Bank, Oriental Bank of Commerce, and Syndicate Bank.

Penalty of 1 crore each has beeN slapped on Bank of America, Barclays Bank Plc, Central Bank of India, Corporation Bank, DBS Bank, Deutsche Bank A.G., HSBC, ICICI Bank and IDBI Bank.

Also 1 crore each penalty has been imposed on IndusInd Bank, JP Morgan Chase Bank, Karur Vysya Bank, Punjab & Sind Bank, Standard Chartered Bank, State Bank of India, Tamilnadu Mercantile Bank and YES Bank.

This story has been published from a wire agency feed without modifications to the text.

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